With so many different products and brands in the market, making the right investment choice can become a little difficult. Cash ISA can work as a great savings option, especially because with a cash ISA, there’s never tax to pay on interest. If you are over 60s, and are considering investing in Cash ISA then you’ve landed on the right page.
Today, we will be talking all about what Cash ISA is, and the best ISA rates for people aged 60 and above. Read down below to find out more.
What is a Cash ISA?
To put it in simple words, Cash ISA is an investment account on which you’re not required to pay tax. You get an ISA allowance every tax year, which specifies the maximum you can save. For the current year and the upcoming year 2020-2021, the total limit for ISA contributions is unchanged at £20,000.
It is only possible to open one Cash ISA per year, however you can transfer to stocks and Shares ISA or Stocks or another Cash ISA and Shares ISA with another provider. Overall, Cash ISA is a great savings option, if you over 60s and want to start saving, you can get your ISA account opened today.
What are the different types of Cash ISA?
There are four main Cash ISA options that you can choose from:
Easy access – Allow savers to have instant access to their cash.
Fixed-rate cash ISAs– Offer a fixed interest rate that is usually higher than an easy access ISA. However, the money can’t be accessed till a set time, which is usually between one to five years
Notice accounts – You need to give your provider an advance notice if you wish to withdraw your money.
Flexible Cash ISA – It is possible to take money out and replace it later in the same tax year. However, this option is not offered by every provider, so you might want to check before signing up.
What is the best Cash ISA rates for the over 60s?
If you are in your 60s and have retired, or have started working towards your retirement, then a Cash ISA could be a great saving and investment option for you. Not only does it help to diversify your risk, but it can also help you increase your short-, medium-, or long-term savings. Overall, it can work as a great savings plan alongside other financial products, such as a pension.
Let’s look at the 5 best Cash ISA rates that you can look into.
1. Moneyfarmstock and shares ISA – up to 55.2%
Moneyfarm stocks and shares ISA is a great option as it allows you to collect as much retirement funds as possible by compounding your annual ISA deposits by between 8.1% and 55.2% yearly.
Also, since you can easily be guided about the investment process by a personal investment advisor, there’s no need for any kind of stock market trader experience in order to invest. The minimal trading fees is as low as 0.35% of assets under management
2. Mintos P2P lender – 11.88%
The best thing about Mintos P2P lender is that with a monthly payment plan you get higher interest rates. The current average interest rate of 12.57% on investment is by far the highest by any cash ISA. The in-depth screening process that they offer help clear out any potential cons, allowing you to make better investment decision by furnishing you with details such as the loanees borrowing history.
Mintos P2P lenders has been in the market only for 3 years and within such a short timeframe the company has gained a lot of success with a net profit of €196,000 in 2017. Furthermore, the whole sign-up process is quite user-friendly and quick to get through.
3. LendingCrowdP2P lender – 8.10%
With an average return of 8.10% on your investments, lending Crowd P2P lender is another great peer-to-peer lending platform that you can benefit from. As compared to other peer-to-peer lending sites, this option has a lower default risk.
Lending Crowd P2P is a great option for those over 60s as the possibility of withdrawing tax-free interest every month builds a steady monthly income stream for the retired individuals.
4. Funding Circle business loans ISA – 6.50%
With an annual return on investments up to 6.50%, funding Circle is yet another beneficial ISA provider and P2P lender.
As far as minimizing risk and selecting investment options is considered, funding circle works a little differently than the rest of P2P platforms. The credit assessment team at Funding Circle very carefully assess and screens every application to ensure that only creditworthy businesses are approved, and further subdivides these groups into two categories.
The first one is the conservative option that invests in high creditworthy and low risk businesses, earning an average return of 4.7%, and the other one is the balanced investment option, that invests in any screened business, earning an interest rate of 6.50%.
5. Property Crowd ISA – 11%
Last but not the least, Property Crowd ISA is a platform that is handled by highly experienced and professional real estate industry players. This P2P lending platform specializes in crowdfunded real estate investments. Majority of the investments in property crowd ISA are secured and for short term – between 6 to 24 months.
Since the returns are usually high, and because to secure investments, there’s no investment loss even if the loanee defaulted, it is a safe platform to invest your money in. Furthermore, you can easily find all key points covered in the information provided in the ‘deal room’ section of the Property Crowd website. All the links to the key documents, including valuation reports, are provided.
What are the advantages of a Cash ISA for the over 60s?
There are many advantages of Cash ISA for the over 60s. Let’s look at a few of them:
- Open to everyone above 16
- Any interest you make from a cash ISA is tax free.
- There is a wide range of investment choices to choose from
- Valuable for those who pay higher rates of tax
- ISAs are highly portable
- Help minimize the misuse of lifetime savings and pensions
- Inherited ISA allowance allows you to pass your ISA savings onto your spouse
- Your money is protected by the government’s Financial Services Compensation Scheme (FSCS)
What are the disadvantages of a Cash ISA for the over 60s?
The main Cash ISA drawback is that as compared to shares and stock-based accounts the investment returns can be quite lower. Other than this, there are a few other drawbacks that include:
- There is a contribution cap of £20,000 for both cash ISAs and investment ISAs for the current tax year (2019/20).
- Your personal allowance will be lost if you don’t use it
- Due to the current economic conditions the interest rates are low
- Your tax position might change when you start to draw a pension
- There is no tax relief on ISA contributions
- Not all Cash ISAs offer great interest rates
- You cannot have an ISA in joint names
If you are in your 60’s or 70’s, the best option for you is to stay on the safe side and invest in a safe and secure Cash ISA platform. To make the right choice, it is important that you shop around for different rates, weigh the pros and cons of different platforms, and talk to different providers about the risks and benefits.